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Foster Hsu, LLP	Family Law Attorneys  Motto
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San Jose Community Property Attorney

What Property Is Community Property?

The divorce process can be confusing, and thinking about property division while negotiating a divorce can make the process seem a lot more complicated. You spent time building a life together, accumulating assets that are important to both of you over the course of your marriage and it is never easy to decide who will get what.

Deciding how to divide assets can be difficult, and it is common for spouses to disagree in the heat of a divorce. Speaking with a skilled San Jose community property attorney who can help you navigate California’s community property laws is essential.

To make an appointment at our San Jose office, call 408-841-7200.

What It Means To Live In A Community Property State

California is a community property state. The term “community property” may imply that everything you and your spouse own has the same status, regardless of who bought it. However, community property laws recognize that there are separate assets that belong to only one spouse, such as:

  • Assets acquired before marriage
  • Inherited property
  • Gifts
  • Assets covered by an agreement that defines which spouse owns which assets in the event of a divorce

It is important to think about when you (or your spouse) acquired certain assets, how you obtained them, and how you have treated them since. Take an inventory of your assets, and include copious notes regarding what you know about them. This is a crucial step as you consider how to divide these assets.

How is Community Property Divided?

Other states have an “equitable distribution” property law, which means the courts divide marital property in a fair manner, which may or may not be equal, depending on a long list of factors related to the parties and the marriage. In a community property state like California, however, every piece of community property is said to be owned equally by the parties, with each spouse owning a one-half interest in the property. California courts strive to divide all community property equally. In some cases, this may mean selling the asset and dividing the proceeds. Where the sale of the property is not feasible or desired, the courts may award an asset to one party while awarding another asset of like value to the other party. Making sure every community property asset is valued appropriately is essential to this process, something the lawyers at Foster Hsu, LLP, excel in.

How does a Prenuptial or Postnuptial Agreement Effect Community Property?

Some pieces of property start out as separate property but can become community property if they are “commingled.” An asset may become commingled when community property is contributed to a separate property asset. Other assets be part separate and part community. For example, a person may go into a marriage with an employee pension or retirement plan, but the person continues to contribute to the pension during the marriage, and the pension continues to earn interest and grow during the marriage. Some parts of the pension may be community property and some parts may be separate. Community property division can be complex and challenging.

One way to keep separate property separate is through a prenuptial or postnuptial agreement. The parties are free to declare that retirement, a business, or even each party’s income from employment is to remain the sole property of one spouse in the event of a divorce, property division notwithstanding. As long as the prenup is valid, courts will uphold and enforce provisions that declare certain property or debts to be marital or separate property.

What is Quasi-Community Property?

If you or your spouse lived in another state during your marriage, you likely earned income or acquired property while in that state. If the property would be considered community property had it been acquired or earned in California, then California courts call it quasi-community property. Quasi-community property is treated the same way as community property in a California divorce, meaning it will be divided equally between the parties along with the rest of the community property.

What is “Transmutation”?

Another quirk of California’s complex marital property law is that the separate property of one spouse can become community property, and community property can become one spouse’s separate property if the parties have an express agreement. The separate property of one spouse can even turn into the separate property of the other spouse! Transmutation is the term used in California’s marital property law to describe these changes.

Transmutation is different from “commingling” of separate property with community property, where a piece of property can change character by the way it is handled. Transmuting property requires the express consent of the party who is adversely affected by the transmutation. Examples of this include when one spouse agrees to transmute their separate property into community property or into the separate property of the other spouse. Transmutation can apply to real estate or personal property.

We Can Answer Your Hard Questions Regarding California Community Property

We at Foster Hsu, LLP, can help you understand what it means to live in a community property state when it comes time to file for divorce. Contact our San Jose community property attorneys or make an appointment by calling 408-841-7200 to explore your options.

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